Union Accord Paves Way For Icahn To Buy Twa

NEW YORK — The machinists union at Trans World Airlines has reached an agreement for a new contract with Carl C. Icahn clearing the way for the New York investor to gain control of the carrier.

Brian Freeman, an attorney who represents the International Association of Machinists and Aerospace Workers, said Wednesday that Icahn was expected to gain control of the airline in a matter of days.

The machinists became the last major obstacle when they sought changes in an agreement they had reached earlier with Icahn that provided concessions totaling about 17 percent annually in wages and benefits.

In the new agreement those concessions remained intact, Freeman said. However, the new agreement does put tighter restraints on Icahn`s ability to sell off the airline`s assets once he gains control, he said.

The other major union, the Air Line Pilots Association, has only minor points left to settle, but those points are not expected to be an obstacle. Freeman said the pilots were expected to sign their contract Thursday.

Icahn won the agreement to buy TWA through the help of its unions, which agreed in August to wage and benefit concessions. But those agreements became subject to renegotiation after Icahn had to change his original purchase terms.

In an amended offer, he was forced to reduce the cash part of his $24-a-share offer from $19.50 to $11, with Drexel Burnham Lambert Inc. providing $900 million in financing.

The offer ran into financing difficulties because of the unexpected high losses that TWA suffered in the fourth quarter.

Freeman said Icahn still had to win control of a majority of the airline`s board, which must approve the amended offer for the 48 percent of the TWA shares that Icahn does not own.

The board is made up of six members, including Icahn and two of his supporters, but sources close to the negotiations say they expected an independent board member to vote with the Icahn bloc.

Icahn also faces an obstacle in the flight attendants union, which has not yet reached any agreement with him and has threatened to strike. But sources familiar with the financing said that Icahn was seeking the extra financing so the airline could withstand a flight attendants` strike.

Once Icahn gains control of TWA, the concessions in the agreements with the pilots and the machinists will go into effect. They are estimated to provide about $300 million in savings and are expected to help reduce the mounting losses of the airline.